Fixed-charge coverage ratio

(redirected from Fixed-Charge Coverage Ratios)

Fixed-charge coverage ratio

A measure of a firm's ability to meet its fixed-charge obligations: the ratio of (Earnings before interest, depreciation and amortization minus unfunded capital expenditures and distributions) divided by total debt service (annual principal and interest payments). Notice that lease payments are sometimes included in the calculations.

Fixed-Charge Coverage Ratio

A measure of a company's ability to pay its fixed expenses, such as rent and interest, on debt without resorting to more debt. A ratio over 1 indicates that the company is able to pay its fixed charges, while a ratio below one indicates the opposite. The fixed charge coverage ratio is calculated thus:

Fixed-charge coverage ratio = (EBIT + fixed charges before tax) / (fixed charged before tax + interest)
References in periodicals archive ?
Similarly, GAAP fixed-charge coverage ratios are expected to remain strong, between 5.
The affirmations recognize certain credit concerns, including declining fixed-charge coverage ratios, a high Funds From Operations (FFO) payout ratio, and material impairments incurred in 2007 associated with CLP's residential-for-sale business.
Interest and fixed-charge coverage ratios measure 2.
Fitch expects fixed-charge coverage ratios to exceed 3.
Together, volume and fixed-charge coverage ratios provide a more accurate picture of current and anticipated credit risk.
Including this planned issue, the company's level of financial leverage and fixed-charge coverage ratios will be well within the tolerance for the current rating on IAG.
1%, with interest and fixed-charge coverage ratios of 12.
While leverage levels are projected to increase, Standard & Poor's expects that the operating portfolio and development-related fee income will provide fixed-charge coverage ratios in the 1.
Moderate financial leverage at the holding company, solid fixed-charge coverage ratios, strong financial flexibility, and an adequate level of capital at the operating companies are other factors contemplated.